-- Just days after hastily abandoning a short-lived exploration of
taking Tesla Inc. private, Elon Musk returned to Twitter to showcase
the impulsiveness that’s raised the eyebrows of investors and
regulators alike lately.
a series of posts Tuesday, the unpredictable chief executive officer
denied that he cried during a New York Times interview earlier this
month. Musk then couldn’t resist trading barbs with a follower who
criticized him for calling a cave explorer in Thailand a
pedophile back in July.
steered clear of making any assertions about Tesla, a key
distinction from his posts that are said to be under
investigation by the Securities and Exchange
Commission. But the missives served as fresh reminders of Musk’s
erratic Twitter tendencies and reinforced concerns about whether he
can adhere to the SEC’s rules, now that he’s decided Tesla will stay
public and continue to fall under the agency’s oversight.
not going to become a typical CEO, so the question is whether he’s
going to make statements that run afoul of securities laws,” said
Ken Bertsch, an executive director at the Council of Institutional
Investors, a trade group that represents public pension funds that
own Tesla shares. With the SEC, Musk is “going to be on a shorter
leash,” Bertsch said. “And I’m sure the company’s lawyers are
telling him that.”
SEC hasn’t acknowledged that it’s investigating Tesla, and Ryan
White, a spokesman for the agency, declined to comment for this
story. A Tesla spokesman also declined to comment.
of the electric-car maker slipped 1.2 percent as of 10:24 a.m.
Wednesday in New York to $308.24. They have fallen 20 percent from
the high of $387.46 reached on Aug. 7.
when Musk started 17
days of drama with his tweet that he had
“funding secured” to take Tesla private, without sharing evidence
that investor money was indeed lined up. Generally, the SEC
considers statements by executives to be material information that
have to be true, and the comment prompted a subpoena from the
Musk has changed course Friday and pledged to
keep Tesla public, one of the biggest risks he faces is that the SEC
will try to bar him from being an officer or a director of a public
company. This level of punishment often stings much more than any
fine, which is why most companies aggressively resist it in
settlement negotiations with the regulator.
attention that the go-private-or-not saga generated from Wall Street
and the government fueled
speculation that Musk may start to tone down
his presence on social media, perhaps at the urging of Tesla’s
board, which was put on the defensive by the episode. The company’s
chairman and biggest shareholder deactivated his
Instagram account last week.
Musk’s decision to continue to respond to critics on Twitter
indicates he won’t change easily, said Charles Elson, a University
of Delaware finance professor who specializes in corporate
someone has engaged in a course of behavior for some time, it’s
usually difficult to change,” Elson said. “I don’t think a CEO
should be on Twitter; I would have hoped that would have been the
lesson. Obviously, it’s not.”
be sure, Musk’s comments Tuesday didn’t delve into topics that are
likely to upset the SEC. Still, his decision to keep Tesla public
may mean the agency keeps a close eye on his public statements for
the foreseeable future.
SEC already had been investigating whether Musk’s vehicle production
forecasts may have misled investors before the regulator started
scrutinizing whether he had secured funding for a Tesla buyout,
Bloomberg News reported on
of Musk’s predictions have been way off. Musk said during a May 2016
earnings call that, during the second half of 2017, he expected
Tesla would produce between 100,000 and 200,000 Model 3 sedans --
the lower-priced car that’s pivotal to the company generating
profit. Tesla ended up building fewer than 3,000 Model 3s in last
year’s second half.
Fisch, a co-director for University of Pennsylvania Law School’s
Institute for Law and Economics, said that Musk’s use of social
media to share important information is increasingly common among
technology executives, particularly those on the West Coast.
lot of these companies, their business models are about pushing the
envelope on regulation,” she said. “If that’s the mindset for your
business model, it makes sense that’s going to carry over with how
you communicate with shareholders.”
For more on
Tesla, check out the Decrypted podcast: